Mario Draghi: the courage of a policy maker

Mario Draghi: the courage of a policy maker

About two weeks ago, the announcement by the President of the Republic to assign the task of leading the country out of the crisis to Mario Draghi certainly represented a fundamental turning point in Italian politics. The reaction positively shook the market; the spread between our government bonds and the German Bund had not reached such low levels since 2015, an injection of confidence towards the new nascent executive that makes us reflect on the figure of the new prime minister. The experience behind the new Prime Minister is remarkable. This is demonstrated by his eight years as President of the ECB during which he became famous for his “Whatever it takes” uttered in London in 2012.

Draghi’s mandate as president

The Central Bank did not start in the best way. In fact, the raging fear in the financial markets due to the increase in sovereign debt in certain Eurozone countries had created friction in the financial markets themselves. An initial sign was the rise in Greek CDS yields, which, as reported by Bloomberg, reached 25,000 points in April 2012. A further source of concern was the dramatic increase in the debt/GDP ratio of some European Argentina WhatsApp Number List countries, such as Portugal, Italy, Ireland, Greece and Spain (PIIGS). The evolution of the crisis demonstrated how the policies focused on inflation targeting implemented up to that point by the ECB were unable to ease the tense climate in the financial markets; for this reason the Board of Directors, led by Draghi himself, decided to undertake new exceptional measures, implementing unconventional tools, which managed to revive the economy.

First of all the Outright Monetary Transactions

which had as their objective the safeguarding of the monetary policy Cambodia WhatsApp Number List transmission channels, in order to prevent the inflation rate from being lower or higher than 2% in the medium term. Furthermore, among the unconventional maneuvers implemented, we remember the famous “bazooka” (Quantitative Easing) strongly supported by the President of the ECB, which served to loosen the stringent conditions on the real credit market. This maneuver aroused quite a bit of controversy: the Bundesbank accused the ECB of financing the public debt of less than virtuous countries. Despite numerous debates, the Governing Council managed.